The Match.com for startups has birthed a relative in the cryptocurrency space. Established in 2010, AngelList has now entered the digital monies space through its new spin-off, Republic. Like its predecessor’s mission of democratizing the investment process, Republic strides to bring Silicon Valley and product investment beyond the lucky few who can afford it by acting as a leader in the U.S. securities sector.

A More Robust Ecosystem

Operating independently from AngelList, the underlying relationship between the two is still key in understanding its strategy in the crypto space.

The distinction between Republic and AngelList, is Republic is an investment platform that provides retail investors around the world with compliant access to well-founded startups and blockchain projects. What makes them unique is its core mission in abiding by U.S. equity crowdfunding regulations. Most importantly, it's under the supervision of the SEC and the Financial Industry Regulatory Authority (FINRA).

I was able to speak with Republic’s CEO, Kendrick Nguyen, a former New York securities lawyer, on why Republic’s core strategy of SEC compliance is instrumental in attracting entrepreneurs, investors, and advisors in both the financial and securities sector.

Kendrick Nguyen, Esq., Former General Counsel AngelList and CEO of RepublicPV Public Relations

Nguyen told me that at the beginning of his career as a New York securities lawyer, he spent the majority of his time in traditional asset management. “When I joined AngelList as their general counsel, they were just launching their syndicate project, while we were pushing out new financial products from 2014-2016,” explained Nguyen.

But, it wasn’t until 2016, that Nguyen launched Republic, and in 2017, Republic launched the Republic Crypto brand.

“Nothing is worth doing in my mind, if it’s not meaningful to whomever is working on that project,” Nguyen emphasized. When I asked the CEO what made this AngelList spin off different, he said his focus was on inclusion.

“For me, making sure we stay true to the mission of inclusion, is everything,” said Nguyen. “That’s why we launched Republic—to bring Silicon Valley closer to home.

New York Becomes First State To Rule ICO's Are Covered Under U.S. Securities Law

While courts have been hesitant to rule on whether or not U.S. securities law are applicable to fraud cases involving cryptocurrency, New York broke the silence on Tuesday, ruling for the first time in American jurisprudence, that U.S. securities laws are applicable for prosecuting crypto fraud allegations. In his ruling, U.S. District Judge Raymond Dearie indicated that federal securities laws should be interpreted "flexibly," after dismissing opposing counsel's motion to dismiss charges on the grounds that cryptocurrencies didn't fall under the Securities Exchange Act.

“The question is whether the ‘elements of a profit-seeking business venture’ are sufficiently alleged in the indictment, such that, if proven at trial, a reasonable jury could conclude that ‘investors provide[d] the capital and share[d] in the earnings and profits; [and] the promoters manage[d], control[ed] and operate[d] the enterprise.’ For present purposes, we conclude that they are.”

U.S. v. Zaslavskiy, 17-CR-0647, U.S. District Court (E.D. NY, 2018)

It's important to note that Judge Dearie's decision did not cite to nor refer to any other cases that have applied federal securities law to crypto-fraud cases. For young attorneys such as myself, this was exciting to see a case of first impression involving crypto, emerge.

As we are now beginning to witness, the legal piece is a major component when deciding whether or not to pursue a blockchain venture or cryptocurrency startup, and the former AngelList general counsel agreed with me.

According to Republic’s CEO, he always believed “fintech” to be cutting-edge, especially when dealing with new financial products. As a young millennial attorney, I wanted to know if Nguyen anticipated utilizing his license in this unconventional manner, where law is only part of the business model, rather than its backbone.

“I always thought the law was extremely relevant to a business, but I never anticipated that my legal background, particularly in capital markets and securities, would be so crucial to the business and product styles of Republic.”

But, Nguyen’s legal experiences were always in established realms, involving fiscally mature ventures. “With hedge funds, there were billions of assets,” explained the attorney. “We dealt with mainstream financial products. I was in academia for two years, and my focus on capital markets was perfect at the time, because that’s right around the time Dodd-Frank was passed, and new laws, regulations, and regulatory guidance were still being rolled out weekly.”

In light of Tuesday's New York judicial decision and this summer's Congressional hearings, I wanted to know the direction in which Nguyen believed SEC compliance to be moving. He emphasized great caution to me.

“I think for those individuals in the space that are selling, distributing, and/or offering tokens and ignoring U.S. securities regulation, they [obviously] need to be very careful on how far they are from overstepping into an area of complete illegality.”

Tuesday's New York ruling evidences Nguyen's words of caution. Having been involved with and in frequent communications with SEC regulators, Nguyen believes the U.S. views this type of regulation in an extremely measured context. “But, at the end of the day, all of the relevant bells and whistles capital markets will come to apply this technology in the crypto-industry, and that’s how it should be.”

Unmoved by the current state of U.S. securities law, the former AngelList general counsel was extremely excited by the pace at which securities law is now changing. “I'm very excited to know that for the first time in almost 80 years of American jurisprudence, crowdfunding is providing individuals with the ability to invest in private security; that it would suddenly become possible again,” Nguyen told me.

“For attorneys of all ages, it has been an exciting time knowing that even in our legal realm, there’s still so much room for change.”

A ‘One Size Fit All’ Solution?

Parsing through the excitement and hype involving both blockchain technology and cryptocurrency, entrepreneurs and investors still need to take caution when deciding whether to bring their ventures into the space. There is a real contrast between a business that is attempting to force this new technology into their structure,and those that incorporate it into an already thriving business model.

“I think many industries approach their decision on a case-by-case basis,” Nguyen interjected. “These implementations of the technology are still very thin. For example, with A.I., the potential is vast, but we are still waiting for that robot to listen to our commands and move around. Or, how about Google Translate having the ability to summarize an extremely lengthy article for me? Neither of which are at a functional part of their life cycles.”

Nguyen agreed with me in that these new technologies are not a universal solution, but we both shared optimism for the vast potential of use cases that will emerge in these new industries.

Considering what Republic is doing, I was curious on its competition. According to Nguyen, the competition falls short because of the lack of 'real-world' application. "We are barely six minutes into this space, and it still requires a great deal of caution. But, it’s also important to enjoy the ride and have optimism in how the future of our technology space will continue to change the world we are living in, for the better."

A New ‘Republic’ For Crypto

By incentivizing it users to take an active interest in their investments, Republic is able to provide access to ICO deals and manage a company’s token sales. Republic takes a small interest in each company it hosts, meaning it acts as an investor in each company, just like participants. Back in June, Republic told CoinDesk, exclusively, in its initial disclosure, that it had raised over $12 million in commitments for its token pre-sale.

As a young investor in the space myself, I can appreciate the company’s mission in issuing their own token to incentivize participants in their ecosystem (investors, founders, advisors) to become more active and contribute more. Nguyen told me that by issuing their token, SAFT-EST ("Simple Agreement for Future Equity and Security Tokens"), investors will have the choice between both tokens and shares in the company.

With SAFEST, when the token is ready, pre-sale investors will have the option between tokens or up to 20 percent of their investment in equity. In the event Republic is unable to launch the token, investors hold a Simple Agreement for Future Equity, ("SAFE") convertible into equity at a trigger event.

Community Engagement Is Everything

In any new industry, whether we are talking about crowdfunding or cryptocurrency, integrity and the ability to provide value within a community is vital. There are a plethora of bad actors in the space that aim to confuse and extort others based off their naivety. Republic is not ignorant to the fact that a distinction needs to be made as between credibility and mere puffery.

In my conversation with Nguyen, he wanted to avoid any highly technical explanation of what “blockchain technology” is, instead focusing on how broad its application can be in any sector. “I would define blockchain technology as anything that relies on trust and on third-party intermediaries to validate a transaction,” said the CEO. His example was a real estate deed system all the way down to your credit card and banking options.

“Utilizing encryption technology enables people to engage directly with it and monetize off of it.”

Entrepreneurs, Don’t Force This Into Your Model

When starting out, Nguyen advises entrepreneurs not to force blockchain technology into their products or business model, simply out of hope of fundraising or raising large amounts of money. Nguyen and I both agreed that this technology may not always be necessary for the business’ model.

“It has to be an authentic use case,” said the CEO. “You must truly believe in it, because if you don’t, investors will see right through that.”

Second, it’s important to validate and cross-reference the business model with friends, family, and other entrepreneurs.

“You need to have resilience and put conviction into what you’re doing. Understanding the mission of what you are doing is everything.”

To You Millennials, Don’t Go Anywhere

But, have no fear, the securities lawyer and CEO had a very different message for young millennial investors, such as myself. In today’s digital age, we are living in a time of engagement. When it comes to starting up investment portfolios, younger investors need to appreciate what they are doing with their money.

“You need to put your money where your heart and conviction is, regardless of whether you are a new investor or a veteran,” he commented.

#1 –Invest A Small Amount Into Businesses That ‘Speak’ To You

Whether you are a student in college, law school, or grad school—each and every one of you should invest a tiny amount into projects, founders, and/or businesses that speak to you. It’s no different with cryptocurrency and blockchain technology. These are such amazing technologies and the world will change very quickly.

When I’m talking tiny amounts, I’m talking $20-$50. Why? At the end of the day, it’s fun, meaningful, and valuable to invest a little, if you can.

#2 –Have A Long-Term View On It, and Leave It Alone

Having a long-term view on your investments is crucial. In eight to ten years, you may be surprised on the potential return it brings. Invest a tiny amount, diversify your portfolio, and walk away.

#3 –Expect to Lose Everything

But, most importantly, regardless of your investments in this space, you need to accept one reality. You need to expect to lose everything. That’s just the nature of the market right now, no different than any other stock or investment. But, this has its own educational value on technology and global economics. This allows for you to become a more engaged member of society.

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Andrew is an Internet Attorney, Author, Adjunct Law Professor, and Media Consultant for ABC, FOX, and NBC in Dayton, Ohio. As a millennial, he is able to provide a unique perspective on new, emerging technologies, social media crimes, privacy implications, and digital curr...